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Dominique JAMME Commission de Régulation de l’Energie - CRE

Dominique JAMME Commission de Régulation de l’Energie - CRE. Agenda. Gas trends in the region : demand, supply and trade The North West region: high potential to achieve a single integrated market. Gas trends in the North West region Demand. 58% of EU gas consumption.

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Dominique JAMME Commission de Régulation de l’Energie - CRE

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  1. Dominique JAMME Commission de Régulation de l’Energie - CRE

  2. Agenda • Gas trends in the region : demand, supply and trade • The North West region: high potential to achieve a single integrated market

  3. Gas trends in the North West region Demand 58% of EU gas consumption Evolution of NW GRI gas consumption since 1975 • DGTREN Baseline scenario (Primes) GRI NW natural gas consumption in 2007 : 280 bcm Data source: BP statistical review of world Energy and DGTREN scenarios • Relative stabilization of the demand after several decades of increase • Uncertainties on the long term dynamics

  4. Gas trends in the North West region: Supply 84% of EU gas production Main external gas suppliers to the North West region GRI NW natural gas production in 2007: 160 bcm in Bcm Supply concentration • UK + Netherlands: 85% of NW GRI production • Norway + Russia: 85% of NW GRI imports Data source: BP statistical review of world Energy and Cedigaz

  5. Imports to the region in 2007 Pipe gas LNG Source: BP statistical review of world energy 2008

  6. The decline of domestic gas production in Europe / GRI North West • Decrease of production: • Production peaked in 2000 • UK became a net importer in 2004 • Norway production should continue to increase but not enough to offset the decline of EU 27 production Source: OECD • GRI NW cons. in 2030: 300 Bcm (280 Bcm in 2007) • GRI NW prod. in 2030: 70 Bcm (160 Bcm in 2007) • GRI NW net imports in 2030: 230 Bcm (120 Bcm in 2007) Source: DG TREN Baseline Scenarios - Primes • Growing dependence on external supply sources

  7. Dragon LNG = 6 Bcm South Hook = 22 Bcm Fos-Cavaou = 8 Bcm The increasing role of LNG in EU gas supplies Existing and under construction LNG regasification capacities in the North-West region Gate = 12 Bcm Isle of Grain (III) = 7 Bcm in Bcm Zeebrugge = 9 Bcm Isle of Grain I and II = 13 Bcm Montoir = 10 Bcm Fos-Tonkin = 7 Bcm Source: GLE

  8. A highly interconnected region Interconnection capacity within the region • Interconnection capacity between NW GRI countries is particularly high comparing to the rest of EU Data source: BP, GTE+

  9. North west European market: TOWARDS A COMMON MARKET DESIGN • Majority of entry/exit systems combined with notional hubs

  10. Correlation of hubs prices Day ahead prices on NBP, Zeebrugge, TTF and PEG Nord March 2008- March 2009 Sources: Argus, Platts, Powernext

  11. Wholesale gas prices in Europe, the decreasing influence of LTCs oil indexation? Long term contracts prices and NBP day ahead and forward Y+1 Sources: Icis Heren for the prices of the long term contracts and Argus for the day ahead and forward prices

  12. The disruption of Russian gas supplies across Ukraine in January 2009 • Three weeks of commercial conflict between Russia and Ukraine in January 2009 •  Cold winter in Europe •  Disruption of gas supply transiting through Ukraine to Europe • Most impacted countries: Eastern Europe strongly dependent on Russian supply • For the North West region, limited impact thanks to an increase in Norwegian supply and good reaction of market mechanisms • End of crisis on 26 January: two agreements on supply and transit for the next 10 years

  13. Share of Russian gas in country supply Cut of gas supply during Rus.- Ukr. crisis Russian-Ukrainian gas crisis – impact on supplies by country • No final customer cut in the NW region during the crisis Source: IEA 2008 and ERGEG

  14. Market reaction during the disruption of Russian supplies across Ukraine • Flows to/from the UK: • gas went back to the • continent on the • Interconnector • Prices: higher on TTF • and PEG nord, • evidencing lack of • supplies 0 Exit Flows Source : Platts European Gas Daily, 29/01/09 Source : Argus

  15. Storage efficiently contributed to compensate for the reduction of imports

  16. Progress can still be made to improve the access to cross-border transmission capacities Percentage of firm available capacity compared to the total of technical capacity

  17. Conclusion: towards a single regional market? • The North West region is a reality • High level of interconnection • Converging market designs • Several hubs & prices correlation • The Russian crisis: • A good test case for the reaction capacity of the North West region • Evidence of good market flexibility

  18. Conclusion: towards a single market? • The GRI NW has a high potential to achieve an integrated market • Main obstacles: • Access to transmission capacity across the region should remain a priority area for action in the GRI NW • Difficulties regarding investment decisions – mismatches between national regulations • The 3rd package will provide new tools towards a single market (ACER, ENTSOG, 10 year investments plans etc…) • Work on the convergence between the regions at a European level

  19. Thank you for your attention! • * * * • dominique.jamme@cre.fr • www.cre.fr

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